A. Gnanasikhamony vs Palukal Panchayat

Krishnaswami Reddy, J.—This petition has been filed by the accused in C. C. No. 15 of 1967 on the file of the Special First Class

Magistrate, Kuzhitnurai, against the order of the said Magistrate in overruling the preliminary objection raised by him on the ""ground that the

complaint against him was Incompetent as there was no procedure laid down in Madras Panchayat Act for the recovery of the amount due from

him under the contract by way of distraint or prosecution.

It is necessary to note the facts very briefly for the purpose of appreciating the point raised by the petitioners: The right of collecting fees from

Kannumamood public market in Palukal Panchayat was leased out to the petitioner by the Executive"" Officer, Palukal Panchayat, and a written

agreement was entered into between the Executive officer of the Panchayat on one part and the petitioner on the other on 7th April 1966 by which

the petitioner had to pay to the panchayat the kist amount in ten monthly instalments at Rs. 1,370.50 and the first instalment was to be paid on 31-

1-1967.

The petitioner defaulted to pay the Instalments and had fallen in arrears to the tune of Rs. 6,320/-. The Executive Officer therefore, filed a

complaint before the Special First Class Magistrate, Kuzhithurai alleging that the petitioner had wilfully omitted to remit the market lease amount of

Rs. 6.320/- due to Palukal Panchayat for the year 1966-67 in respect of lease Contract of the Kannumamood Market. It was alleged in the

complaint that the petitioner wilfully prevented distraint. The complaint was instituted under CL 22 of Sub-section (2) of Section 178 of the

Madras Panchayats Act and violation of condition as per para 3 of the agreement executed by the petitioner on 7-4-1966 and also under

Notification No. 52 of G. O, Ms. No. 1248 dated 26-4-1961.

The petitioner raised an objection In the lower Court that the amount due under the contract cannot be recovered In the manner provided in

Notification No. 52 of G. O. Ms. No. 1248 dated 25-4-1961 and that, therefore, the prosecution was not maintainable. The learned Magistrate

by his Order dated 20-9-1967 overruled his objection by stating that the Panchayat Rules did not mention about any contracting party, but it

simply says that any sum due to the Panchayat under the Panchayat Act should be recovered by a suit and ultimately held that he can take

cognizance of the offence and proceed with the trial.

I sought the assistance of Mr. C. P, Louis, Advocate, to assist the Court as the point involved in this case may in the larger interest affect the

rights of parties. The question which has to be considered is whether the Panchayat has got any right to prosecute a person for his failure to pay the

Panchayat any amount which he agreed to pay as per the agreement entered into between him and the Panchayat. . It therefore, becomes

necessary to note the relevant provisions of the Madras Panchayats Act, 1958 (hereinafter called ''the Act''). The power to enter into contract is

provided u/s 8 Sub-section (3) of the Act which is as follows:

Every Panchayat shall be a body corporate by the name of the village or town specified in the notification issued u/s 3, shall have perpetual

succession and a common seal, and, subject to any restriction or qualification imposed by or under this Act or any other law, shall be vested with

the capacity of suing or being sued in its corporate name, of acquiring, holding and transferring property, movable or immovable, of entering into

contracts and of doing all things necessary, proper or expedient for the purpose for which it is constituted.

Sub-section (2) of Section 99 of the Act relates to levy of fees in a public market. Sub-section (2) of Section 99 runs thus:

Subject to such rules as may be prescribed, the Panchayat............may after obtaining the previous written permission of the Inspector, levy any

one or more of the following fees in any public market at such rates, not exceeding the maximum rates if any ""prescribed in that behalf as the

.................. panchayat may think fit Section 176 of the Act confers power on the Panchayat to farm out collection of fees. It runs thus:--

No distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any tax or other sum due to a

panchayat or panchayat union council under this Act or any rule, by-law, regulation or order made under it after the expiration of a period of ""three

years from the date on which distraint might first have been made, a suit might first have been instituted, or prosecution might first have been

commenced as the case may be, in respect of such tax or sum.

Under Section 178(2)(xxii) it is provided as follows:

The Government shall, in addition to the rule-making powers, conferred on them by any other provisions contained in this Act, have power to

make rules generally to carry out the purposes of the Act.

(2) In particular, and without prejudice to the generality of the foregoing power, the Government may make rules-

(xxii) as to the realisation of any tax or other sum due to a panchayat or panchayat union council under this Act or any other law or any rules or by-

laws, whether by distraint and sale of movable property, by prosecution before a Magistrate, by a suit, or otherwise."" Under this rule-making

power, the Governor of Madras by Notification No. 4 framed rules in respect of assessments and collection of taxes. Rule 24 relates to mode of

collection of taxes. Rule 25 relates to distraint and sale of movable property and Rule 25(2) provides for prosecution, if for any reason the distraint

or a sufficient distraint of the defaulter''s property is impracticable and Rule 32 provides for imposition of fine.

The relevant Rule 32 with which we are now concerned is the Rule relating to the recovery of sums due to the Panchayat other than the taxes, as

we are now concerned with the amount due under the contract. In Notification No. 52, the Rule provides as follows:--

Recovery of sums due to the panchayat: All costs, damages, compensation, penalties, charges,'' fees (other than school fees), expenses, rents (not

being rents for land and buildings demised by the Panchayat) contributions and other sums which under the Madras Panchayats Act, 1958, or any

other law or rules or by-laws made thereunder are due by any person to the Panchayat may, if there is no special provision in the Act or the rules

made thereunder for their recovery, be demanded by bills which shall be served on the persons concerned and recovered in the manner provided

in the rules for the collection of taxes under the Madras Panchayats Act, 1958.

This Rule provides that the amounts due under the various heads specified therein could be recovered in the manner provided under the rules for

the collection of taxes, namely, by distraint and if distraint becomes impracticable, by prosecution.

Now, the question is whether this rule includes the amount due to the Panchayat under a contract between the Panchayat and the third party

under any of the heads mentioned therein. It is clear that the specific heads provided therein, namely, costs, damages, compensation, penalties,

charges, fees, expenses, rents and contributions would not cover the amounts due under the contract. But the Rule includes ""other sums"" also. Can

it be said'' that the amount due under the contract would come within the item of ''other sums''? It is very significant to note that the Rule does not

take in whatever amount due to the Panchayat but limits to the amount due to the Panchayat under law or rules or by-laws made thereunder. The

amount due under the contract may be an amount due to the Panchayat but it cannot be said that the said amount is due under the Panchayats Act,

or any of the Rules framed thereunder. The Rule does not include specifically the amount due under the contract, In the absence of such a specific

provision and with a limitation to the sums due under the Act or any other law or rules or by laws made thereunder, it is clear that the amount due

under a contract to the Panchayat is excluded within the purview of this Rule. Otherwise, when a power was conferred on the Panchayat to enter

into contract by virtue of Sub-section (3) to Section 8 of the Act, the Notification could have included specifically the amount due under the

contract also under this Rule. It is, therefore, evident that the intention was to exclude it within the purview of this rule.

In this context, it is worthwhile to note the similar provisions contained in other Acts. Section 387 of the Madras City Municipal Corporation

Act, 1919 runs thus:

Recovery of sums due as taxes All costs, damages, penalties, compensations, charges, fees, rents, expenses, contributions, and other sums which

under this Act or any rule, by-law or regulation made thereunder or any other law or under any contract including contract in respect of water-

supply or drainage made in accordance with this Act, and the rules, by-laws and regulations are due by any person to the Corporation shall, if

there is no special provision in this Act for their recovery, be demanded by bill containing particulars, of the demand and notice of the liability

incurred in default of payment and may be recovered in the manner provided by rules 21 and 28 of the rules contained under Part VI of Schedule

IV...............

Rules 21, 28 and 29 of Schedule IV to the said Act contain similar rules as in Notification 52 of the Panchayat Act providing for distraint and

prosecution. This section specifically includes in spite of other sums due under the Act or any rule, by-law or regulation made thereunder, the

amount due under any contract including a contract in respect of water-supply or drainage made in accordance with this Act and the amount due

to the Corporation. The amounts due under the contract are significantly omitted in Notification No. 52 which is under consideration,

Similarly, Section 344 of the Madras District Municipalities Act, 1920 are in pari materia with Section 387 of the Madras City Municipal

Corporation Act, 1919, with the exception that this Section does not include all contracts as provided u/s 387 of the former but includes only the

amount due under a contract in respect of water-supply or drainage made In accordance with the Act, rules or by laws made thereunder. This

section also Includes the sums due under the contract mentioned therein besides the other sums due. In this Act, also, there are provi sions which

are similar to the provisions In the Madras Panchayats Act in respect of the mode of recovery by distraint and by prosecution. It is therefore, clear

from the provisions of these Acts that wherever the Legislature intended to include the amount due under the contract also to be recovered by the

mode of distraint and prosecution, it specifically said so. When there is an omission in the Panchayat Act, the omission must be taken to be a

deliberate one and that the Legis lature did not intend to include the amount due on the contract,

It is significant of note that the Rules framed under the Madras District Boards Act, 1920 and the Madras Village Panchayats Act 1950 are in

pari materia with the rules under consideration. The sums due under the contract were not included in these rules. It, therefore, appears that though

the Legislature has given power to the Corporation and the District Municipalities to recover the amount due under the contract by following the

modes of distraint and prosecution for recovery, yet, in its wisdom, it did not want to confer such power to the District Board, Village Panchayat,

Town Panchayat or Panchayat Union to collect any amount due to the, Panchayat under a contract. The Legislature then passed the Madras

Panchayats Act, 1958 and the Government framed the Rules thereunder, and followed the pattern provided under the Madras District Boards Act

and the Madras Village Panchayats Act though they would have been aware of the provisions of the Madras City Municipal Corporation Act and

the Madras District Municipalities Act It Is not necessary to go into the motives of the Legislature of the Government for not following the pattern

provided under the Municipal Corporation Act. 1919 and the District Municipalities Act, 1920. The ""absence of the words ""Sums due under any

contract to the Panchayat"" in the Rules is very significant. It shows that a Panchayat cannot prosecute a per-son who committed default in respect

of payments due under the contract to the Panchayat.

In the following decisions in respect of the provisions of the District Municipalities Act, 1920, and the Local Boards Act, 1920, it has been held

that the words ""other sums"" used in the provisions of the said Acts will not include the amount due under the contract.''

In Abdul Azees Sahib v. Cuddapah Municipality, ILR(1901) Mad 475 Sir Arnold White, C. J, held that ""money due under a contract entered

into with a Municipality for the right to collect tolls in consideration of a money payment does not fall within any of the provisions of Section. 269 of

the District Municipalities Act, 1884 and a contractor who fails to pay what is due under such a contract cannot be convicted and, fined under that

Section 269 of the District Municipalities Act, 1884 is in pari materia with Section 344 of the District Municipalities Act, 1920.

In. Punla Syamalo In re, ILR Mad 381 : AIR 1924 Mad 669 referring to the words used u/s 221 Of the Madras Local Boards Act, 1920, the

Court held that the words ""other sums"" in that section should be read ejusdem generis with the words preceding therein. The Division Bench found

that the amount due under a contract of lease though of the toll cannot be treated as falling within the words of Section 221 of the Local Boards

Act and that the sum in question was not payable ""under or by virtue of this Act"", but is payable under the contract between the parties,

In Kumaragurudasa Swamigal Vs. Krishnaswami Mudaliar and Others, the Division Bench held that money due to a Municipality under a

contract cannot be summarily recovered by the Municipality u/s 221 of the Madras Local Boards Act of 1920,

In Ahemad Hydros v. Alwaye Municipality, 52 Cri LJ 271 = AIR 1951 Trav Co 82 the Travancore-Cochin High Court, in dealing with

Section 365 of the Travancore District Municipalities Act which is in pari materia with Section S69 of the Madras District Municipalities Act held

that the amount due under a contract for the collection of market cess will not come under any of the Municipal dues and the prosecution of the

Contractor was unsustainable.

Thus, it is seen that the Courts have uniformly taken the view that the words ""other sums"" due under the Act could not be equated with the

amount due under the contract. In the result I find that the Special First Class Magistrate had no jurisdiction to entertain the complaint and the

proceedings before him are quashed. The petition is allowed.

Before taking leave of this case, I am bound to express my gratitude to Mr. C, F. Louis, Advocate, who rendered valu able assistance to the

Court by making submissions after having carefully made a research of all the relevant Acts and provisions and the case law on the subject.